Archive | Cost Accounting

This article throws light upon the seven main steps for installations of a costing system. The steps are: 1. Objectives to be Achieved 2. Study the Product 3. Study the Organisation 4. Deciding the Structure of Cost Accounts 5. Selecting the Cost Rates 6. Introduction of the System 7. A Follow-up. Installation of a Costing […]

This article throws light upon the three main types of costs. The types are: 1. Fixed Costs 2. Variable Costs 3. Semi-Variable Costs. Type # 1. Fixed Costs: Fixed Costs also referred to as non-variable costs, stand-by costs, period costs or capacity costs are those costs which do not vary with changes in volume of […]

Here is a compilation of top eight problems on break-even analysis with their relevant solutions. Break-Even Analysis: Problem with Solution # 1. From the following particulars, calculate: (i) Break-even point in terms of sales value and in units. (ii) Number of units that must be sold to earn a profit of Rs. 90,000. Solution: […]

After reading this article you will learn about Income Determination under Absorption and Marginal Costing. Under absorption costing, fixed costs are treated as product costs while marginal costing excludes fixed costs from product costs. The example given here illustrates the method of income determination under absorption and marginal costing: Example: In the two income statements […]

After reading this article you will learn about Differential Cost:- 1. Meaning of Differential Cost 2. Determination of Differential Cost 3. Essential Features 4. Managerial Applications. Meaning of Differential Cost: Differential costs are the increase or decrease in total costs that result from producing additional or fewer units or from the adoption of an alternative […]

Contribution is the difference between sales and variable cost or marginal cost of sales. It may also be defined as the excess of selling price over variable cost per unit. Contribution is also known as Contribution Margin or Gross Margin. Contribution being the excess of sales over variable cost is the amount that is contributed […]

This article throws light upon the ten major managerial problems in application of marginal costing. The problems are: 1. Pricing Decisions 2. Profit Planning and Maintaining a Desired Level of Profit 3. Make or Buy Decisions 4. Problem of Key 5. Selection of a Suitable or Profitable Sales Mix 6. Effect of Changes in Sales […]

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